LEASING

IS LEASING THE WAY TO GO?


As part of a new revitalization plan, the Kenyan government has begun the process of leasing five public sugar plants to private businesses that would operate the millers for 20 years. This occurs months after the Cabinet granted permission for the lease by waiving Ksh117 billion ($724.5 million) in debt that public sugar millers owed, including taxes, interest, and penalties.
Through the Agricultural Development Corporation (ADC), the government has 98.8 percent of the shares in Sony, 97.93 percent in Nzoia, 96.22 percent in Chemelil, and 1.42 percent through the Development Bank of Kenya (DBK). Additionally, it has 49 percent of Miwani and 82.8 percent of Muhoroni.
The goal, according to the Ministry of Agriculture and Food Authority, is to make it easier for these sugar enterprises to become profitable again following modernization and effective management free from bureaucratic obstacles, therefore increasing their competitiveness in the Comesa, EAC, and global sugar markets.
The National Treasury has listed nine advantages of leasing, including increased farmer livelihoods, modernized sugar mills, tax revenue, reduced public sector funding, and increased competitiveness, as reasons why the government favors leasing over privatization.
The government cites a number of factors, including inadequate governance, a dearth of cash and a large debt load, and falling cane yields, as reasons for the difficulties facing state-owned sugar mills. The tale will be told, whether or not leasing resolves the sugar crisis.

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